Asian markets and European markets are both showing a solid amount of strength in trading today.

1278 is becoming a strong short-term resistance level on the S&P 500.

Today’s strength has us opening up at the 1278 level.

Ideally, it would be good if we can gap above that price level because then that resistance level would act as support going forward.

Like what we saw yesterday, a failed test of recent highs could create a strong intra-day reversal even for the best stock picks.

A strong rally today, especially one that takes us into the outer edges of the Bollinger Bands, would be a good reason to do some profit taking, which would be in the mid-1280s.

Continue to watch the market’s relationship with the 10-day moving average, as the support level is becoming increasingly vulnerable over the past three days. Should we end up closing below the 10-day, watch how the market responds to the 20-day moving average, just underneath it.

The creation of a “lower-low” in this market would occur if there is a break below 1251 and would essentially stall the trend out.

Yesterday showed that dip-buying continues to persist, and that the bears do not have enough selling power, to get past it at this point.

The more long-term trend-line dating back to Sept. 1 currently has support at 1234.

For the bears – do not let the bulls close above 1278. Doing so would likely create a move even higher.

For the bulls – close above 1278, and establish a new higher-high in this market.

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